Amazon Shares Spike Post Earnings: One Key Takeaway

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Shares of Amazon rose sharply after the company reported revenue and earnings that easily cleared estimates.

Amazon founder and CEO Jeff Bezos said a core driver of the strong results was a fast growth rate of new Prime members, as Amazon has been ramping up one-day and same-day shipping capabilities.

The stock was rising 10.97% to $2,075 a share in postmarket trading Thursday, after having risen 0.68% in regular trading hours.

For the December quarter, Amazon reported GAAP earnings per share of $6.47, beating Wall Street estimates of $4.04, with the result rising 7.1% year-over-year. Total revenue was $87.4 billion, beating analyst expectations of $86.029 billion and growing 21%.

“More people joined Prime this quarter than ever before, and we now have over 150 million paid Prime members around the world,” said Bezos in a statement. “We’ve made Prime delivery faster — the number of items delivered to U.S. customers with Prime’s free one-day and same-day delivery more than quadrupled this quarter compared to last year.”

Revenue for online stores, Amazon’s largest e-commerce revenue segment, was $45.657 billion, just missing estimates of $45.685 billion and rising 15%. Amazon Web Services, the company’s cloud services business, saw revenue of $9.95 billion, beating expectations of $9.815 billion and rising 34%, even as some cloud-company analysts see Microsoft, which beat quarterly revenue estimates Wednesday, eating into Amazon’s cloud market share.Amazon’s total operating margin was 4.4%, against expectations of 3.1%.

The company guided for first quarter 2020 revenue of between $69 billion and $73 billion, against analysts’ estimates of $71.6 billion. Operating profit was guided for between $3 billion and $4.2 billion, also narrowly missing analysts estimate of $4.044 billion.

The stock has risen 5% in the past three months, underperforming the S&P 500’s gain of 7.78%.